Waiting on 'economic D-Day' details by US Treasury Sec Bessent

EU mid-market update: Waiting on 'economic D-Day' details by US Treasury Sec Bessent; Nvidia results on Wednesday and Fed Chair Warsh's speech at Jackson Hole on Friday should be the main events of the week.

Notes/observations

- Europe has no domestic catalyst, so the imported signal dominates. Bunds opened firmer, Ireland outperformed on Moody's upgrade, Belgium taps today. Data was second-tier and soft: Czech confidence missed clearly across all three measures; Polish retail sales undershot on the year. ECB's Cipollone held the line that policy is well calibrated.

- Rates story is quiet only until Friday. Long-end yields are testing multi-year highs, the US thirty-year having hit its highest in nearly two decades last week; Treasury's expanded buybacks bought a rally that fully unwound. Dollar sits heavy near a three-month low on fiscal-dominance and debasement concerns, and a modest consolidation plan would disappoint further. Warsh's inaugural Jackson Hole keynote is the week's real event, credibility and productivity, not a September steer. Separately, US-Canada talks collapsed into a 50% Section 338 tariff with Ottawa matching dollar-for-dollar from 8 September, a warning for the Mexican auto track.

- Bessent promised an "economic D-Day" in a weekend FT piece, with detail due at 14:00 ET (18:00 GMT) today; Asia and Europe directionless waiting for it. Question is scope: naming the large Asian buyers widens the shock and invites retaliation against Gulf infrastructure, omitting them guts the credibility of the push. Beijing has warned it will defend its interests; Tehran says it stockpiled FX ahead of war. Pakistan's army chief is in Tehran today, Oman's foreign minister tomorrow on Hormuz navigation specifically. Physically, transits remain a fraction of pre-war levels despite a sharp two-week rebound off a low base, CENTCOM has redirected 70 vessels, and Aramco is sounding London brokers on war-risk cove, the cleanest line into European P&C and freight costs.

- Nvidia reports Q2 results after the close on Wed, Aug 26th, with the stock already under pressure from a flurry of strategic moves. On Friday the company notified customers of AI system price hikes greater than 15% starting early next year for platforms using Vera Rubin and Grace Blackwell chips. Over the weekend it was also reported to be discussing a possible Perplexity investment at a $30B-plus valuation that could include licensing and employment deals, while also planning to use its $6B Poolside agreement to train a powerful open-weight model aimed at rivaling DeepSeek and Kimi K3. These steps follow last month’s release of the open-source 30B-parameter Nemotron 3.5 Lightning and ongoing work on a trillion-parameter Nemotron 4, highlighting Nvidia’s dual push to raise pricing power while expanding its own model footprint.

- Traders and AI analysts are still chasing the source of Ox Alpha, the unclaimed open-source model that appeared on OpenRouter on August 20 under the stealth/ox-alpha ID and immediately looked near-Mythos on coding and agentic work—posting ~80% on a small real-world SWE sample against Claude Fable 5’s 65%. OpenRouter bills it as a 1M-token multimodal reasoner built for sustained software engineering and production loads; it ran free in preview, drew heavy traffic, and even got a public nod from Stripe’s Patrick Collison. The forensic trail is hard to ignore: near-perfect tokenizer fingerprint matches with GLM-5, identical API error codes, matching video-token math, and Z.ai’s established pattern of dropping models as “Alpha” before claiming them. Xiaomi’s MiMo team and a few other Chinese or Western labs remain lower-probability alternatives, but the weight of evidence still points to an enhanced GLM variant from Zhipu operating under deliberate anonymity.

- In new podcast interview, OpenAI’s CEO Altman admitted the industry - including OpenAI - has been too aggressive on timelines, noting that economies and societies carry enormous inertia and will adapt far more slowly than the models themselves improve. He is now less limited by raw intelligence than by how little useful context any AI still has about him, and argues the technology has yet to find its iPhone-style product breakthrough even though much of the underlying capability already exists. OpenAI is deliberately building across the entire cost-performance curve so cheap models can absorb huge volumes of work, while treating the required compute build-out—custom chips, fabs, racks, power—as the most expensive infrastructure project in history. Altman’s two sharpest concerns remain loss of human control and the concentration of power in a handful of companies and models; he even bets that AI-driven scientific discovery may ultimately prove more consequential than everyday automation.

- SPEEA’s 17,000 engineers and technicians rejected Boeing’s four-year offer - its biggest wage-pool hike since 1983 at 29.4%, plus extra leave, lower overtime caps, and immediate cash-and-stock incentives - by 64% among professionals and 72% among technical workers, even though their own bargaining team had endorsed it. Both units simultaneously authorized a strike by nearly 90%, citing lingering distrust over offshoring, schedule trumping safety, ignored technical decisions, and pay that has lagged inflation and the aerospace market. A walkout would not stop the assembly lines but would freeze the engineering sign-offs required to deliver finished jets, reviving the 2000 slogan “No Nerds, No Birds” and putting MAX 10 and 777X certification at risk. With the current contract still in force until October 6, the two sides now have about six weeks to close the gap before a strike becomes possible.

- Ahead for Europe: Spanish and French flash CPI, ECB accounts and BoK Thursday, US PCE, Fitch on France Friday - awkward against Paris reiterating its deficit target while renewing fuel aid.

- Asia closed lower with KOSPI underperforming -3.1%. EU indices +0.0-0.3%. US futures -0.5% to +0.1%. Gold +0.9%, DXY +0.2%; Commodity: Brent -1.8%, WTI -2.4%; Crypto: BTC +0.8%, ETH +2.0%.

Asia

- New Zealand Q2 Retail Sales Q/Q: -0.5% v +0.2%e.

- Alibaba priced its HK$80B placement of 710M shares at HK$112.70/shr.

Global conflict/tensions

- Treasury Sec Bessent wrote over the weekend that economic D-Day was coming for Iran and entering the endgame (**Note: Press conferees set for 14:00 ET (18:00 GMT) on Mon, Aug 24th.

- Iran national security chief Rezai said to have threatened to strike US companies if Trump launches his “economic D-Day”.

- UK PM Burnham arrived in Kyiv, Ukraine with reports circulating o pledge support for long-range missile construction capable of striking targets inside Russia.

Americas

- Jackson Hole begins on Thurs. Press reports that Fed Chair Warsh would seek to soothe investors’ nerves as signs of economic strain mount.

- Fed's Kashkari: Rising Treasury yields not a concern.

Trade

- US-Canada trade talks collapsed; US imposed 50% tariffs on some Canadian products; Canada PM Carney stated to match dollar for dollar with tariffs.

- Canada PM Carney’s government sees little prospect of renewed trade talks with the U.S.

Speakers/fixed income/fx/commodities/erratum

Equities

Indices [FTSE +0.12% at 10,829.62, DAX -0.04% at 26,117.62, CAC-40 -0.06% at 8,479.00, IBEX-35 +0.22% at 20,005.72, FTSE MIB +0.04% at 52,687.00, SMI +0.01% at 14,458.40, S&P 500 Futures -0.11%].

Market focal points/key themes: European equities drifted sideways near three-week lows on Monday as Washington’s threat of the “greatest financial offensive” against Iran kept risk appetite firmly suppressed, even after Brent eased 1.5% to around $91.80. The Stoxx 600 slipped 0.1% while the DAX, CAC 40 and FTSE 100 barely budged, with desks locked on Treasury Secretary Scott Bessent’s 14:00ET (18:00GMT) sanctions briefing and Tehran’s vow to shut down all Persian Gulf energy exports if the measures proceed. Notable upside came from Oxford Nanopore (+3%) extending its post-H1 rebound, Trainline (+2.5%) retracing last week’s CMA-driven selloff, Rank Group (+2.5%) following strong FY results, and Antofagasta (+1.5%) riding a weaker dollar and basic-resources lift; on the downside Stellantis fell 3% on collapsed U.S.–Canada trade talks, while SUSS MicroTec, AIXTRON and Infineon dropped 1–2.5% amid broader semiconductor de-risking ahead of Nvidia, and Kainos, Avon Technologies and Rightmove each shed 2–3% on limited fresh catalysts. Looking ahead the week hinges on Nvidia’s results and Fed Chair Kevin Warsh’s Jackson Hole keynote, against a backdrop of ongoing Strait of Hormuz constraints that continue to embed a structural supply premium into inflation expectations.

Equities

- Consumer discretionary: Big Yellow Group [BYG.UK] –1.5% (Barclays downgraded to Underweight from Overweight in its fresh European-property sector review).

- Energy: Equinor [EQNR.NO] –1.0% (oil-price pressure outweighing positive company news: Brent is sharply lower while Equinor announced both a North Sea gas/condensate discovery with Aker BP and a new long-term European gas-supply agreement), Siemens Energy [ENR.DE] –1.5% (no company-specific Monday catalyst identified; likely high-duration/AI-infrastructure de-risking ahead of Nvidia and Jackson Hole in an otherwise only mildly weaker DAX).

- Healthcare: Oxford Nanopore Technologies [ONT.UK] +3.0% (continuation after last week's H1 update: loss narrowed, margins/cost control improved and the company set a >$700m 2030 revenue ambition; Deutsche reiterated Buy at 195p and Berenberg Buy at 200p last week; no new Monday RNS identified).

- Industrials: Stellantis [STLAM.IT] –3.0% (broader auto/trade-risk selloff after U.S.–Canada trade negotiations collapsed; the stock is the major drag on the CAC 40 despite today's separate European data showing BEV registrations +13.6% YoY in July), Antofagasta [ANTO.UK] +1.5% (likely basic-resources continuation/sympathy; STOXX basic resources +0.8% this morning as metals benefit from the weaker dollar, after Antofagasta already gained 5.4% Friday), Volkswagen [VOW3.DE] –1.5% (likely auto/trade-risk read-through after the breakdown in U.S.–Canada talks; one of the weakest DAX large caps at the open alongside Siemens Energy).

- Technology: SUSS MicroTec [SMHN.DE] –2.5%; AIXTRON [AIXA.DE] –2.0%; Infineon [IFX.DE] –1.0% (shared semiconductor/AI-risk driver: negative Asian chip lead, Samsung/SK Hynix weakness, Micron pressure and de-risking ahead of Nvidia Wednesday; AIXTRON is falling despite JPMorgan reiterating Overweight and saying optoelectronics is running stronger than management indicated).

Speakers

- ECB Cipollone (Italy) stated that monetary policy needed to be well calibrated; inflation was far from adverse and severe scenarios from Jun Staff Projections. No signs pointing to deflation.

- France Fin Min Lescure reiterated stance that govt would do all it could to achieve the 5% Budget Deficit to GDP target. Not easy to cut taxes on large companies.

- UKMTO said to receive report of incident 63 NM west of Yanbu, Saudi Arabia. Tanker struck by unknown projectile which cause fire on vessel.

- Iran Foreign Ministry spokesperson Baghaei stated that Iran would use all of its bilateral capabilities to confront the US economic sanctions. Issued warnings regarding economic cooperation with US pressures on Iran. Oman counterpart to visit Tehran on Tues (Aug 25th) to continue consultations over the Strait of Hormuz.

- Iran Central Bank Gov Hemmati noted that it had stockpiled FX in anticipation of war.

- Pakistan Army chief said to have departed to Iran for peace efforts. Said to have spoken to President Trump ahead of the trip.

- China Foreign Ministry Daily Briefing noted that any US sanctions on Iran would worsen tensions; China would take actions to protect interests.

Currencies

- USD was consolidating some of its recent losses. Market participant awaiting Bessent’s plan on Iran isolation. Also on the agenda focus is Kansas City Fed's annual Jackson Hole symposium. Fed Chair Warsh likely to focus on credibility and emphasize that the Fed was ready to act on inflation to control the long end of the curve.

- EUR/USD at 1.1675.

- GBP/USD at 1.3650.

- USD/JPY at 159.10.

- Bond yields began the week on lower levels helped by a slight decline in oil prices.

- The 10-year German Bund yield last at 3.24%, France 10-year Oat at 4.11% and 10-year Gilt yield at 5.04%; 10-year Treasury yield: 4.70%; 10-year JGB: 2.86%.

Economic data

- (FI) Finland July PPI M/M: +0.1% v -0.7% prior; Y/Y: 6.9% v 6.7% prior.

- (NO) Norway July Credit Indicator Growth Y/Y: 4.3% v 4.4% prior.

- (CZ) Czech Aug Consumer Confidence: 102.3 v 105.5e; Business Confidence: 100.2 v 100.6e; Consumer & Business Confidence: 100.5 v 101.3e.

- (PL) Poland July Real Retail Sales M/M:2.2 % v 2.0%e; Y/Y: 3.9% v 4.3%e; Retail Sales (overall) Y/Y: 5.3% v 4.6%e.

- (TW) Taiwan July Unemployment Rate: 3.3% v 3.3%e.

- (CH) Swiss Weekly Total Sight Deposits (CHF): 463.7B v 458.8B prior; Domestic Sight Deposits: 437.1B v 433.5B prior.

- (TW) Taiwan July M2 Money Supply Y/Y: 7.4% v 8.1% prior; M1 Money Supply Y/Y: 7.3% v 9.4% prior.

Fixed income issuance

- None seen.

Looking ahead

- (NG) Nigeria Q2 GDP Y/Y: No est v 3.9% prior (no set time).

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (DE) Germany to sell combined €5.0B in 6-month and 12-month BuBills.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (BE) Belgium Debt Agency (BDA) to sell €2.6-3.0B in 2031, 2036 and 2045 OLO Bonds.

- 06:00 (IL) Israel to sell bonds.

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 08:00 (PL) Poland July M3 Money Supply M/M: 0.6%e v 1.3% prior; Y/Y: 11.7%e v 11.8% prior.

- 08:00 (MX) Mexico Q2 Final GDP Q/Q: 1.5%e v 1.5% prelim; Y/Y: 2.2%e v 2.2% prelim; GDP Nominal Y/Y: 4.3%e v 3.4% prior.

- 08:00 (MX) Mexico Jun IGAE Economic Activity Index (Monthly GDP) M/M: 0.0%e v -0.3% prior; Y/Y: 2.6%e v 1.1% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:15 (SE) Sweden Central Bank (Riksbank) Dep Gov Bunge.

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:30 (US) July Chicago Fed National Activity Index: -0.05e v -0.02 prior.

- 09:00 (CL) Chile July PPI M/M: No est v 0.6% prior.

- 09:00 (FR) France Debt Agency (AFT) to sell €5.5-7.1B in 3-month, 6-month and 12-month bills.

- 10:30 (CH) Swiss National Bank (SNB) President Schiegal.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 14:00 (US) Treasury Bessent holds press conference on Iran.

- 16:00 (US) Weekly Crop Progress Report.

- 17:00 (KR) South Korea Aug Consumer Confidence: No est v 106.8 prior.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 75.0 prior.

- 21:30 (AU) Australia RBA Aug Minutes.